Florida Farm Bureau Casualty Insurance Co. issued a homeowners insurance policy to the Coxes. The policy excluded any losses caused, either directly or indirectly, by flood or water damage of any kind.  The Coxes’ home sustained extensive damage caused by Hurricane Ivan and was determined to be a total loss due in large part to flood damage and in lesser part to wind damage. The Coxes demanded coverage, and Florida Farm tendered $12,000 for the windstorm damage. The Coxes declined the payment.

In the ensuing litigation, the trial court found that under Mierzwa v. Florida Windstorm Underwriting Association(877 So. 2d 774 [Fla. 4th DCA 2004]), "if it is found that a carrier has any liability at all to the owner [of] a building damaged by a covered peril and deemed a total loss, that liability is for the face amount of the policy." Florida Farm Bureau appealed to the 1st District Court of Appeals, which held that under Florida’s 2004 Valued Policy Law (VPL) Section 627.702 Florida Farm was obligated to pay out policy limits if any wind-related damage had occurred to the homeowners’ property.  The court noted that although the VPL section had been amended so that the statute does not apply where the loss was caused in part by a covered peril and in part by a noncovered peril, the amendment was not applicable in this case because it specifically prohibited retroactive application to claims filed prior to its effective date, which was June 1, 2005.

Despite this second loss, the Florida Farm Bureau certified the following question to the Florida Supreme Court: Does Section 627.702(1) of the Florida Statutes (2004), require an insurance carrier to pay the face amount of the policy to an owner of a building deemed a total loss when the building is damaged in part by a covered peril but is significantly damaged by an excluded peril? The Florida Supreme Court granted review with oral arguments.  Click here to watch a webcast of the oral arguments, which were heard yesterday, June 7th.